Book Review - Nudge: improving decisions about health, wealth, and happiness
Every day, we make decisions on different topics such as the meals we eat, personal investments, career steps, … unfortunately, we often choose poorly.  The reason, the authors explain, is that, being human, we are susceptible to various biases that can lead us to blunder.  Our mistakes make us poorer and less healthy.

nudgeNudge: improving decisions about health, wealth, and happiness
by Richard H. Thaler, Cass R. Sunstein1

Thaler and Sunstein demonstrate that thoughtful choice architecture can be established to nudge us in beneficial directions, without  restricting freedom of choice.

Research shows that most people stick to the default choices. They (and other seemingly trivial menu-changing strategies) have a huge effect on outcomes.

It seems reasonable to say that people make good choices in contexts in which they have experience, good information and prompt feedback.  We do less well in contexts in which we are inexperienced and poorly informed (have you ever tried to order in a Chinese restaurant with only a Chinese menu?) and in which the feedback is slow or infrequent (isn’t this the reason that people eat the wrong food or do not exercise enough?).

The authors give an interesting overview of how simple rules of thumb such as anchors, availability and representativeness help us to cope with the numerous decisions we have to take daily. In more detail, an anchor influences us by ever-subtly suggesting us a starting point for our thought process. The availability bias is at work, e.g. when we increase people’s confidence by reminding them of similar situations in which everything worked out for the best. The ‘representativeness’ effect, e.g. cancer cases in a neighborhood can cause people to confuse random fluctuations with causal patterns.

Thaler and Sunstein also describe the difference effects between gaining and losing something.  Roughly speaking, losing something makes us twice as miserable as gaining the same thing makes us happy.  Which implicates that we do not assign specific values to something, but it means also that loss aversion operates as a kind of cognitive nudge, pressing us not to make any changes, even when these changes are very much in our interest (doesn’t we experience that when we consider a career step?).

For lots of reasons, people have a general tendency to stick with their current situation.

Thaler and Sunstein also give us some practical tools to challenge this status quo bias, such as framing: e.g. when doctors are told that ‘ninety of one hundred are alive’ they are more likely to recommend the operation than if told that ‘ten of hundred’ are dead.

They also indicate how we in most cases follow the herd and the general lesson is clear.  If choice architects want to shift behavior, they might simply inform us about what other people do.  Tax payers are less likely to cheat, when they know that the actual compliance level is high.

Another striking finding is the mere-measurement effect, which refers to the finding that when people are asked what they intend to do, they become more likely to act in accordance with their answer.  Research has found that if people are asked how often they expect to floss their teeth in the next week, they floss more.  By the same token if people are asked whether they intend to consume fatty foods in the next week; they will consume less.

Thaler and Sunstein emphasize that the social influences such as information, peer pressure and priming can easily be enlisted by private and public nudges. They show that by knowing how people think, we can design choice environments that make it easier for people to choose what is best for themselves, their families and their society. 

A sharper second half might have made this book’s message more powerful still.
Yet, it’s still a thought-provoking and interesting read with plenty of case studies and familiar scenarios.

  • 1Nudge: improving decisions about health, wealth, and happiness by Richard H. Thaler, Cass R. Sunstein, Yale University Press, 2008, 293 pp

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